Should you have a bank account for every property you own?

Question

My parents own 4 properties with a total of 37 units. I recently started helping them with the business and I want to help them organize their accounting better.

My questions are:

• How do you all do your accounting with multiple properties?
• Do you all have multiple bank accounts? (one for each property)
• Do you manage separate expense accounts for each one?
• How do you all organize your accounting? are you very specific (assigning expenses to units themselves) or broad (assigning expenses to the property in general)?

Thank you in advance!

William Battistelli · Answer

I only have one rental (with a partner), which kind of forces us to have a separate account for it. One thing that I have found to help keep track of the financial side of rentals is E-Money. This software functions similar to quicken’s mint, but allows grouping of items for rentals together such as mortgage, property, bank account, so you can see each grouping separately, and how they factor into the big picture of your finances.

If you want more info about the software, feel free to reach out.

Anthony Wick · Answer

@Simon W.

So you and a few others are telling us, to open a separate bank account for every property you buy? Completely separate account? I’d like to hear from those that own 40,50, 100 properties. You’re telling me they should have 100 bank accounts?

I’m small time, but that seems crazy. I have an account for my properties that I own in my own name, and 1 account in the LLC’s name for the properties owned with partners. Two accounts total.

Lance Lvovsky · Answer

@Olga Merino

If they own in their names and treated as sole proprietorship for tax purposes then yes I recommend separate account for each property. With 4 properties you will have 4 entries on schedule e of their tax return. Makes your parents lives easier and the cpa who is preparing the tax return easier. Also helps in organizational in the event of an IRS audit.

Hideyuki Gojima · Answer

@Olga Merino

It is exciting that you started helping your parents.

To answer your question, yes it is always the best to have a separate bank account for each property. You can technically bookkeep it separately but it will be much easier to monitor and manage.

Most of the cases, one bank to receive rent and pay expenses for the property which means one financial state per property. In your case, there are 4 properties, so I recommend you have 4 separate bank accounts. You may also open savings for security deposits.

You can assign expenses to each unit but that could be overkill because you do not have to unless one unit equals one property like a condo.

Good luck!

Simon W. · Answer

yes always have separate accounts.

Anthony Wick · Answer

@Simon W.

I think there’s an in-between. Depends on size and values of properties. I have properties in my own name and I have partners with properties in our LLC. Separate bank account for LLC from personal of course. I plan on 3-5 properties per LLC. Sure, you can go all separate for everything. But both my attorney and CPA feel it’s more expense and work than necessary.

Simon W. · Answer

@Anthony Wick

If your CPA says do it with one bank account, then by all means. But my career in real estate accounting they always have LLC for each property unless then it's 2 properties next to each other and they put it under 1 entity.

Anthony Wick · Answer

@Simon W.

Ya, I also think it’s silly to have an LLC for each and every property as well. It’s almost like some people are purposely making things more difficult.

Simon W. · Answer

That depends, if you have 40,50, 100 LLCs, then yes have 40, 50, 100 bank accounts.

Olga Merino · Answer

@William Battistelli

That software sounds interesting. I'll look into it and contact you if i have any questions.

Should you have a bank account for every property you own?

Should you have a bank account for every property you own?

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